The median worker in the United States will make a paltry $31,099 a year. I can be assured that most that make this wage will make more at some point in their careers, although I imagine that some do make this wage for an entire 50 year career. But even if you manage to never progress in your career for whatever reason, rest assured that yes, even you, can become a millionaire. It just might take a little longer than the CEO of your company. Who let us be honest, spends money like there is no tomorrow. Which in an ironic twist, may allow you to have a high net worth when you retire, although, of course I am not making any guarantees.
You’re probably saying “Wow thanks for insulting me, now show me the money!”, well, O.K lets get into it. So after taxes the median wage earner can expect to have about $2,100 a month. This may not seem like a lot, especially if you have to save for you know, RETIREMENT! But there are a couple of helpful things you can do for your wallet. For one get a roommate, the average U.S. apartment is about $1,400 but with a roommate this will go down to $700 a month, along with utilities being split, your cost of occupancy will be about $800 dollars, meaning you will have $1,300 after rent/utilities/internet. After that Doctor Sensei is going prescribe you a bill of “no fun” until you start making/saving more which will sort out your entertainment budget, because it is now effectively $0. After that you obviously need to eat which will probably take up $250 a month, so you can actually eat decent food.
On top of that, you probably have to drive your car around, so say goodbye to another $115 in insurance, and $50 in gas (I’m assuming you’re driving an absolute beater of a car, and that you don’t owe anything on it). After all that you will have $785 dollars left, your cellphone will probably eat up another $50 a month, so after that you’ll have $735 left. I will assume that average person will have another $235 or so dedicated to other miscellaneous expenses that I am forgetting. So after all the expenses, the median wage earner could have $500 left over for saving.
Assuming a 6% rate the average person can invest this money each month into an account (whether that be stocks, bonds, commodities I couldn’t say). The 6% should be a nice conservative target, due to the fact that the annual return of the S&P 500 is about 11% a year. This mediocre $500 periodic monthly payment will compound with other payments, and this will lead to a truly massive account balance after, what is to be honest, a very long time.
As you can see if you donate $500 a month you could have nearly $1.9 million dollars which by it self is close to the $2 million target that a lot of financial advisers like to use for retirement. At first, it will seem like you are not really making much headway but given enough time the most powerful force in the universe, compounding interest, will take over and make you a millionaire, in theory. But of course no one wants to live with a roommate and have “no fun” for 50 years, so of course your focus should be two fold. You need to save money of course, but also you need to maximize your income. Whether that be through acquiring new skills or getting an education I cannot say for sure. The median income isn’t a whole lot but it doesn’t mean that you can save money that will eventually allow you to enjoy your retirement.
Disclaimer: This is not financial advice, nor is this investment advice. All financial and investment advice should be made with the input of a trusted financial advisory or investment professional.